The Federal Deposit Insurance Corp. continues the auction process for the beleaguered Silicon Valley Bank, with final bids due by Sunday afternoon. The bank has been struggling since November, when it was revealed that its largest customer, Tesla Inc., was in debt by $2 billion. If the final bids are not sufficient to save the bank, it could be liquidated and its assets sold off to repay Tesla’s debtors.
Even if a deal is reached between the bank and the government, it’s unclear what that would look like. It’s possible that new management could be brought in to run the institution, but it’s also possible that no one could come up with a solution and SVB would go bankrupt. The bank had more than $175 billion in deposits and $209 billion in total assets, so even if only a fraction of those were made available to creditors there would still be significant losses for those who invested in SVB.
The fallout from the Silicon Valley Bank crisis could have serious implications for thousands of tech companies across the globe. According to US Treasury Secretary Janet Yellen, the government will not bailout Silicon Valley Bank with taxpayer money, but is still concerned about depositors – including many tech companies – who are struggling after SVB’s bankruptcy. This could further damage a sector that has already been hit hard by the global financial crisis, and could lead to more companies going bankrupt.
In recent years, the Overseas Chinese community has exploded in size, with immigrants from all over the world coming to China in search of a better life. However, as the number of foreigners increases in China, so too does crime
The news of Silicon Valley Bank UK Limited entering insolvency proceedings comes at a sensitive time for the banking sector in the UK. The country’s flagship lender, HSBC, is currently in the midst of an extensive £20 billion settlement with US regulators over money laundering and terror financing offences. This has led to fears that other large banks will be next in line for government intervention, putting the country’s fragile economic recovery at risk.
Due to the sudden liquidity issues caused by SVB-UK’s closure, many tech startups are unable to pay their employees, placing them in a precarious position. This shutdown may have significant consequences for the economy as a whole and could have widespread implications for numerous companies.
EMBED >More News Videos Caught on Camera: frantic moments leading up to Lakewood Bank bank robbery.
With branches everywhere in the metro area, more people than ever are feeling the pinch as a result of Lakewood’s closure. “A lot of my customers are affected, they’re not going to be able to do their banking the same way,” said Rosa Chavez, a teller at Capitol Bancorp in southeast Houston. Unfortunately for Chavez and others impacted by the closure, they’re not alone. Dozens of tech entrepreneurs and venture capitalists spent over the weekend lobbying UK Prime Minister Theresa May and her Cabinet ministers urging them to intervene by
It was only a matter of time before the tech industry found itself in trouble. The UK government had been drawing up plans for some kind of emergency cash lifeline for the industry for some time now, and it looks as if things are finally coming to a head. Tech firms have been struggling with high unemployment and a difficult market overall, and if nothing is done soon they could potentially go bankrupt. It remains to be seen how this
Chancellor Jeremy Hunt has announced plans to help struggling companies cope with the current financial situation, by providing funding for staff to meet their cashflow requirements and pay their employees. However, he also stated that a long-term solution is needed in order to avoid complete losses for some of Britain’s most promising companies. This announcement comes as a significant blow for many small businesses across the country, who are already feeling the pinch of decreasing sales and increased competition. While this solution may provide some relief in the short term, it is still unknown how much longer these companies will be able to survive without any major change.
The Chancellor’s statement outlined the government’s plans to help UK companies in the digital sector. The government has been treating this issue as a high priority and is working at pace on a solution to avoid or minimise damage to some of our most promising companies.
SVB-UK is hoping to tap into the growing demand for corporate banking services by developing a Bounce Back Loan Approach which would see tech clients of the bank borrow from a major UK bank with SVB acting as a guarantor. This innovative service would target businesses that are in need of short-term cash infusion but don’t have access to traditional lenders due to their high credit ratings or because they operate in regulated industries such as banking, insurance, and pharmaceuticals.
Despite much speculation over an unnamed buyer of SVB-UK, no apparent solutions had presented themselves as of Sunday night UK time. Fears have circulated online that the broadcaster may be sold to the Russian government in response to Russia’s involvement in the Ukraine conflict; however, this has yet to be confirmed. If a sale does not occur before Thursday’s deadline, then the broadcaster will be taken into institutional ownership.
“We are writing to urge immediate government intervention in the banking sector, as we are now witnessing a wave of collapses that threaten to turn many technology companies into technically insolvent. This can have serious consequences for the economy, jobs and innovation.
Some of these banks were too-big-to-fail and therefore received Government support when they threatened to collapse. Now that these banks have failed, taxpayers are left holding the bag. We believe this is not the answer and governments must get involved.”
A large British bank, SVB UK, has gone into insolvency after losing over £7bn in deposits. Under Financial Services Compensation Scheme rules, only £85,000 (£170,000 for joint accounts) will be available to the company’s customers. This means that many people who are likely to be affected by the bank’s closure will not receive anything close to their full savings.
Given that Lloyds Banking Group has already been judged to be a bad risk by the Government, and Barclays is considered to be one of the least risky big banks, it seems unlikely that either bank would agree to take over any other institution. This leaves the possibility open that the Government may have to intervene directly in order to prevent another financial crisis from happening.
The Bank of London has been named as a potential suitor by the BBC for its planned takeover of the UK’s 5th largest clearing bank, The Bank of Scotland. The move is seen as an attempt by the bank to boost its position in the financial sector and increase its influence over Britain’s economy. If completed, the deal would bolster The Bank of London’s already sizable portfolio and give
According to Sky News, Oaknorth Bank, a British “neobank” could make an offer to buy SVB-UK. If approved, this would be the largest foreign investment in UK banking history. The due diligence process for such an offer could take several days. This news comes just a few weeks after the UK government announced that it would seek to block any foreign takeover attempts of UK banks.
Oaknorth has come under fire in recent months for their ties to the Conservative party and Rishi Khosla, a high profile donor to the party. Many have called for a formal boycott of the company, citing its political affiliations as problematic.
It is interesting to note that a number of potential buyers for the SVB-UK business could include Abu Dhabi’s state holding company ADQ, and listed conglomerate IHC. These buyers would likely be interested in acquiring both the bank’s physical and digital businesses, as well as its consumer creditω offerings. While it is still remains unclear which buyer will ultimately come forward, this news provides further insight into the growing interest in UK banking assets by international investors.
A Bloomberg report dated March 9th 2018 alleges that Sheikh Tahnoon bin Zayed, chairman of the Royal Group, oversees ADQ, First Abu Dhabi Bank PJSC and the Abu Dhabi Investment Authority. The trio of funds are collectively worth $790 billion and are among the largest in the world. As head of these organizations, Sheikh Tahnoon has a vested interest in steering them in a positive direction.
Apparently, HSBC and JP Morgan are interested in acquiring SVB-UK. This news is surprising, as neither bank had been mentioned as a potential buyer up until this point. It’s possible that they’re looking to expand their UK operations or simply improve their relationship with the company. Whatever the case may be, it’ll be interesting to see where this turns out.
